NTT DoCoMo Inc. said it will finally start carrying Apple Inc.’s iPhones in Japan on Sept. 20 to keep users from fleeing to iPhone-carrying rivals SoftBank Corp. and KDDI Corp. That’s grim news for Japan’s phone makers: DoCoMo’s embrace of the iPhone 5S and iPhone 5C destroys their last safe harbor at home.

Largely dependent on DoCoMo , the country’s biggest mobile carrier with more than 60 million subscribers, struggling Japanese phone makers such as Fujitsu Ltd., Sharp Corp., and Sony Corp. are likely to see their businesses eroded still further by the iPhone, already Japan’s top-selling smartphone.

Handset maker NEC Corp. has said it would stop making smartphones after DoCoMo abandoned its policy to protect all its suppliers equally from competition from global smartphone heavyweights. Unable to staunch its bleeding subscriber numbers, DoCoMo this past summer gave top billing to Samsung Electronics Co.’s Galaxy S4 and Sony Corp.’s Xperia A phones. Panasonic Corp. has also said it would stop making consumer smartphones.

With the iPhone on board, it will likely mean less marketing support from DoCoMo at a time when Japanese handset manufacturers need the assistance. To make matters worse, the Japanese brands – with the exception of Sony – have almost no smartphone presence outside Japan, making them even more dependent on the backing of DoComo and other domestic carriers. SoftBank and KDDI carry Japanese brands, but they have focused much of their marketing efforts on promoting the iPhone.

Japan’s handset makers didn’t always count on DoCoMo’s protection. A decade ago, both NEC and Panasonic developed leading technology that helped DoCoMo establish the world’s first mobile Internet service. Manufacturers such as Sharp Corp. and Kyocera Corp. developed the first cellphones featuring built-in cameras. All had their eyes on overseas markets.

But DoCoMo always dictated the terms of handset features as well as research and development. Seduced by DoCoMo’s generous incentives, handset makers toed the line. As a result, innovation slowed. The deciding blow came when development of smartphone technology stalled in Japan when the presidents of both DoCoMo and Japan’s No.2 carrier, KDDI Corp., scoffed at its market potential, noting that existing Japanese phones were already smart.

The notable exceptions were Sony Ericsson, which sold most of its phones outside Japan, and to a lesser extent, Kyocera Corp., which rolled out its last DoCoMo cellphone in 1998 and carved out a niche as a supplier of waterproof phones to No.3 U.S. carrier Sprint Corp. Kyocera has said it will now supply its Hydro Elite phones to Verizon Wireless.

Sony has since bought out its mobile phone joint venture partner Ericsson and it is now trying to establish itself as a global rival to Apple and Samsung. It still has a long way to go despite some promising handsets.

Seeing the writing on the wall in a saturated Japanese market, Fujitsu is looking to emulate Kyocera. It has started selling a smartphone with larger buttons targeting older people in France. Sharp also hopes to win users in China.

But the niche markets they hope for are a far cry from what Japanese handset makers envisioned a decade ago, when they had an overwhelming lead with advanced mobile phones.

Ten years ago, NEC expected to take overseas markets – starting with China – by storm. Withdrawing would have been “unthinkable,” Chief Financial Officer Isamu Kawashima said after the company’s July announcement it was pulling the plug on smartphones, looking back on those days.

About Japan Real Time

Japan Real Time is a newsy, concise guide to what works, what doesn’t and why in the one-time poster child for Asian development, as it struggles to keep pace with faster-growing neighbors while competing with Europe for Michelin-rated restaurants. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, the site provides an inside track on business, politics and lifestyle in Japan as it comes to terms with being overtaken by China as the world’s second-biggest economy. You can contact the editors at japanrealtime@wsj.com